Adani Power Limited (ADANIPOWER.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Adani Power Limited Q3 FY '26 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions]. I now hand the conference over to Mr. Mohit Kumar from ICICI Securities Limited. Thank you, and over to you, sir.

Yes. Thank you, Rutuja. Good evening. On behalf of ICICI Securities, I would like to welcome you all to Q3 FY '26 Earnings Call of Adani Power Limited. Today, we have with us from the management, Mr. Dilip Jha, CFO; Mr. Nishit Dave, Head, Investor Relations. We will start with brief opening remarks, which will be followed by Q&A. Over to you, sir.

Thank you, Mohit. Good afternoon, everyone, and thank you for joining the call. Our CEO, Mr. S.B. Khyalia, could not join us today due to some business exigency, and we apologize for this. Now let me take you through our performance for the quarter of FY '26 and 9 months. On operational -- operating environment, let me brief you that power demand in quarter 3 FY '26 was weaker than last year. As you know, this year monsoons started early in May and extended up to October. Temperatures were also cooler compared to last year. As a result, all India power demand was marginally lower at about 392 billion units. This was broadly flat versus the same period last year. Higher renewable generation also impacted thermal demand. Together, these factors led to lower merchant market price. The average market clearing price in the day ahead market declined sharply year-on-year. Now our operational performance, despite this environment, our operations remain resilient due to our fuel logistics cost advantages, long-term tie-ups and competitive merit order position in most PPAs. Our installed capacity stands at 18.15 gigawatt as of 31st December '25. This was higher than last year due to acquisition of the Vidarbha plant. Power sales in Q3 FY '26 were 23.6 billion units. This was slightly higher than 23.3 billion units same period last year. This increase came despite a lower plant load factor of 62.6%. PLF declined from 63.9% last year due to weaker demand. Higher operating capacity helped offset lower utilization. For the 9-month period, power sales increased to 71.8 billion units. This was up from 69.5 billion units in 9 months last year. The increase was driven by our capacity additions. One important development is that we have made the 600-megawatt Butibori power plant fully operational now. When we acquired it in July 2025, it had been in a shutdown state for several years. We have tied up its capacity in a 5-year PPA with Maharashtra DISCOM, which is being supplied at full capacity now. On revenue performance, continuing total revenue for quarter 3 FY '26 was INR 12,717 crores. This was slightly lower than INR 13,434 crores in the same period last year. The decline was mainly due to lower power selling rates, merchant prices were significantly lower year-on-year, import coal prices were also lower because of which energy charges lowered in some import coal-linked PPAs. However, we have been able to get higher realization due to short-term bilateral tie-up. Other income for quarter 3 of last year was higher mainly due to higher late payment surcharge income as compared to quarter 3 of this year. For the 9-month period, continuing revenue was INR 40,524 crores. This compares with INR 41,951 crores in 9 months '25. Higher volumes have largely offset the impact of lower rates for 9-month period. Fuel cost for quarter 3 FY '26 was 9.7% lower in quarter 3 FY '26 at INR 6,800 crores as compared to INR 7,500 crores for quarter 3 of the same period last year. This reflects the reduction in import coal prices I explained to you. Fuel cost was similarly lower by 5.4% between the 2 corresponding 9-month period ended 31st December. Continuing operating expenses were higher by 14.8% at INR 1,280 crores in quarter 3 FY '26 as compared to INR 1,115 crores in quarter 3 FY '25. And this is largely due to the recently acquired assets being operational for the full period under consideration, overhauling expenses at various plants and higher outlay for CSR expenses -- spend. EBITDA performance. So despite lower revenue, profitability remained strong. Continuing EBITDA for quarter 3 FY '26 was INR 4,636 crores, which was slightly lower than INR 4,786 crores in quarter 3 FY '25. This decline reflects lower realization. However, cost control and operating efficiency helped protect margin. Contribution from newly acquired assets also supported EBITDA. For the 9-month period, continuing EBITDA was INR 15,713 crores. This compares with INR 16,478 crores last year. Lower powering sale rate and higher CSR spend were partly offset by scale benefit. On profit before tax and PAT front. Continuing profit before tax for quarter 3 FY '26 was INR 2,800 crores. This was higher than INR 2,659 crores in quarter 3 FY '25. The improvement was driven by lower finance costs, which offset the decline in EBITDA. Profit after tax for quarter 3 FY '26 was INR 2,488 crores. This compares with INR 2,940 crores last year. Last year PAT in quarter 3 was higher due to higher onetime prior period income recognized in quarter 3 FY '25 as compared to quarter 3 FY '26. In quarter 3 FY '25, prior period income was slightly higher at INR 1,400 crores as compared to INR 278 crores for quarter 3 this year. Similarly, total prior period income for 9 months ended December '25 was INR 1,353 crores as compared to INR 2,420 crores for the corresponding period of FY '25. For the 9-month period, PAT was INR 8,700 crores. This compares with INR 10,150 crores in 9 months FY '25. Now turning to the balance sheet. We continue to maintain strong liquidity with timely payments being received from all customers, including Bangladesh. Total debt as of December 31, '25, was INR 45,331 crores. Net debt stood at INR 38,679 crores. Debt increased from March '25 level. This was mainly due to bridge financing for capital expenditure. Importantly, leverage remains comfortable. Strong cash generation supports ongoing expansion. Now let me brief you on PPA portfolio and visibility. Its key strength for us remain our contracted revenue profile. During the quarter, we received a letter of award for 3,200-megawatt project in Assam. This project will be developed on a greenfield basis under the DBFOO model. Fuel linkage will be arranged under SHAKTI Policy. With this, half of our upcoming capacity is already tied up under long-term PPA. We have now tied up existing operating capacities under long-term and medium-term PPAs with various state DISCOMs. Out of our present operating fleet of 18.15 gigawatts, we have almost tied up under PPA 90%. This provides strong revenue visibility. It also reduces exposure to short-term market volatility. On capital raising and credit profile. Recently, we further strengthened our funding profile. We raised INR 7,500 crores through AA-rated non-convertible debentures. The issuance was done in 4 tranches. Tenures range from 2 to 5 years, and coupon rates range from 8% to 8.4%. We have been able to get investments from some of the largest mutual funds and commercial banks among others. The fund will support capacity expansion and working capital. Our credit rating continued to be AA stable even with the new additions of debt. This reflects our strong business and financial position. Now on project execution front, let me now update some of our project executions. We're progressing well on the 23.7 gigawatt thermal expansion program. Mahan Phase is about 80% complete. Raipur Phase 2 is around 44% complete. Raigarh Phase 2 is close to 38% complete. Construction at Korba Phase 2 project has also resumed. These projects are scheduled to be commissioned in phases from FY '27 onwards. Advanced equipment ordering and in-house execution provide us strong competitive advantages. We are looking at ongoing bids of 15 gigawatts to fill up the balance 12 gigawatt capacity. We also expect the other states to come up with their long-term PPA bids for thermal power soon. Now let me conclude with our business outlook. We expect the return on a strong power -- we expect to return the strong power demand in the ensuring year as the base effect 2 years out. We are already witnessing good bilateral PPA demand with high tariff being tied up. However, we are focusing on capacity tie-up under long-term and medium-term contracts to moderate exposure to rate volatility. Our increasing share of contracted capacity provides stability to earnings as well as visibility to revenue and liquidity. Our upcoming capacity additions will drive earnings growth. It is worth repeating here that the new PPA generate EBITDA from plant availability while fuel charges are a pass-through. These new PPAs have much better, higher capacity charges than our legacy PPAs. This will lead to much better per megawatt EBITDA in the coming years. In conclusion, our balance sheet is strong, liquidity is excellent, and we are well positioned to fund growth. We remain confident in the long-term power demand outlook for India. Thank you for your time. We will now be happy to take your questions. Thank you.

[Operator Instructions]. The first question is from the line of Abhinav Nalawade from ICICI Securities.

My first question is for the Assam and Karnataka PPA. What is the tariff, fixed and variable charge? Also, have we signed any extra 200-megawatt PPA with Assam?

So Assam PPA for 3,200 megawatts. The energy charges is INR 6.30. Out of that, capacity is INR 4.16. Or you are asking for Raipur? Karnataka?

Karnataka PPA.

Yes. So this is INR 5.78 per unit for Karnataka.

And the fixed component will be?

INR 4.5.

Understood. My second question is on CapEx. What is the CapEx incurred in 9 months FY '26? We had estimated about INR 130 billion for the whole year. So where are we now? And also, can you give the exact time lines in terms of which quarter we can expect the upcoming 3 facilities, Mahan, Raipur and Raigarh to get commissioned?

So we have spent CapEx in this year as on 31st -- just give me 1 minute. So on expansion side, this year, we have invested the CapEx of near about, you can say, the INR 15,000 crores, including advanced payment we have given to our the BTG supplier.

Okay. And in terms of time lines, when can we expect the upcoming -- I mean, if you can get specific in terms of quarter, in which quarter we can expect?

Yes. So what -- so this is as per the scheduled target. Next year, we are going to add -- we have already scheduled for addition of Korba, 660 into 2, this year. Next year, we'll add. And also though this is the schedule Mahan, we are also putting all the best possible efforts also to complete Mahan Phase 2 as well.

Mahan Phase 2 is in next year?

Yes. Yes. And for the other plants, you can expect commissioning 6 months after Mahan, unit after the other. So by the middle of FY '29, all these 3 projects would be completed.

So all projects are going on as per the scheduled plan. And next year, we will be adding the Korba, and also we are putting efforts for Mahan and then every single project. So these are as per the scheduled time line. We were confident that we will be able to complete all the projects as per prescheduled targeted time line.

Understood. My next question is on -- if you can give PLF revenue and EBITDA for Godda power plant?

Godda power plant, yes. Give me one minute. Godda quarter 3 revenue is INR 2,210 crores. Continuing EBITDA, INR 1,092 crores. And if you will ask for 9 months, the revenue is INR 6,700 crores, and continuing EBITDA is INR 3,247 crores.

Okay. Sir, my last question is, given the Vidarbha and Karnataka get operational, would the dependence on merchant reduce in coming quarters?

Yes. So you might be witnessing our strategy. So if you see that 2 years ago, our open capacity and the PPA was 80-20, which got reduced to 84-16. Now this is 90 and 10. So we are very much mindful about the merchant tariffs and rate. And what we have strategized that we are minimizing our portfolio to open capacity, so resulting into maximizing our -- so resulting into ensuring the assured revenue EBITDA irrespective of market volatility. So this is already at 10%, so the opening capacity.

The next question is from the line of Dhruv Muchhal from HDFC Asset Management.

Just one question is if you can give the volume, long term, and merchant volumes for the quarter?

Yes. [ Give him an approximation ].

Give me just a moment. So merchant volume for the quarter was 4.3 billion unit. And for 9 months, this is 15.65 billion unit -- for 9 months. And for quarter 3, this is 4.3 billion.

The next question is from the line of Aniket Mittal from SBI Mutual Fund.

So in your opening remarks, sir, you mentioned about the impact of merchant prices being significantly lower as well as imported coal price impacting the energy charges. Just to understand, could you quantify both of these on a Y-o-Y basis?

Sir, are you able to hear us? Hello?

Yes. Sorry, we were on mute. Just a second, please. I'm sorry, it was on mute. This is -- sorry, I missed that. So merchant realization in terms of tariff, if you see, for this quarter, this is INR 4.37, right? As against that, if you see in the same period last year, it was INR 4.56. And if you will talk about 9 months, this year 9 months, INR 5.44, and it was INR 6.16. So I'm repeating it again. For quarter-on-quarter basis, per unit realization this year for quarter 3, INR 4.37. Same period, same quarter last year, it was INR 4.56. For 9 months, it is INR 5.44. Last year, for 9 months, it was INR 6.16. But as I explained to you that we are mindful about this market volatility and we have what we have done, we have now around more than 90% capacity under PPA and only we have 10% in open capacity. And it is our strategy also, over the period of time, we are also trying to reduce this capacity, so maybe by 3% to 4% over the period of time. So over the period of 6, 7 years, it will further reduce from 10% to 3% to 4%.

Understood. And on the imported coal price, what's the cost at which you have bought or incurred at a landed basis this quarter versus the same quarter last year?

So let me brief you about the indices. This time, quarter 3, the indices -- so I'm talking about the HBA Index, it is $104, as against the same quarter last year, it was $123. So $123 versus $104, right? And if you are talking on a year-and-year basis, this is against $138 to $108. So there is a reduction of near about the $15, $16 on per metric ton basis. This resulted into a little bit in -- so because our revenue in some of the plants based on the imported coal. So imported coal, indices will reduce, our revenue also will reduce.

Yes, I understand that. Just on the earlier question, I missed the PLF number for Godda, if you could let me know for this quarter versus last year? As well as you mentioned this year's revenue EBITDA. Could you also let me know the same for the same quarter last year for Godda?

Yes. So the PLF for Jharkhand for Godda this year is -- on quarter basis, this is 68%, and same period last quarter -- last year, it was 50%. So if you -- quarter 3 last year, 50% PLF. This time, it is 68% PLF. So there is increase in PLF in Godda by 18%, so supply of units has also increased in comparison to last year. This year, the supply has also increased in Jharkhand.

Right. And the revenue EBITDA number for last year, same quarter for Godda?

Last year -- give me some time, I have to check. So this last year number is -- I have to check, just give me 1 minute. Yes. So quarter 3 FY '25, the revenue was INR 2,132 crores, and EBITDA was INR 1,222 crores. And if you ask for 9 months same period, it was INR 6,604 crores, and EBITDA was INR 3,989 crores. Now it is on the comparative basis, right? So for 9 months, this EBITDA for this year INR 3,247 crores as against the 9 months last year, INR 3,989 crores. So there is a reduction of INR 700 crores. This is due to year of the reduction in the indices.

And of that, almost -- this quarter, the reduction is close to INR 120 crores on a Y-o-Y basis -- [indiscernible]?

Yes.

Okay, okay. And the other part to understand was there are 2 essentially large PPAs that were in the works for Rajasthan and Uttarakhand, which you were expecting to come. I think there's been some sort of news with respect to the regulator not approving the Rajasthan tender. Just your thoughts on that. And going forward, when can we expect these tenders to...

Yes, Dhruv (sic) [ Aniket ], Nishit here. So just to actually clarify about the regulator's view, the regulator felt based on the submissions given that the full 3,200 megawatt PPA may not be required at the same -- altogether, which was actually based on the resource adequacy plans that the regulator had seen, which were submitted by the DISCOM. This is based on the proceedings in the regulatory hearings. So the DISCOM has represented that they would like to revisit the assumptions and prove their accuracy actually, sort of support their case, emphasize their case that they require this sort of power -- 3,200 megawatts of PPAs. And the regulator has given them that permission to present their case again. So I think that should take place in some time, and we should see the PPA moving ahead after that. So that was the case of Rajasthan. And so because the state -- DISCOM actually felt that the numbers considered by the CEA were a bit more conservative as compared to what the DISCOM itself saw in terms of the demand for power. In case of Uttarakhand, again, the bid documents have been released. I think that it's going to take a little bit longer in case of Uttarakhand, but we should see the PPAs -- the bids being submitted over the course of the next few months.

Okay. Just 2 more questions. One is, I can see that the interest cost has been declining fairly well. How is the average cost of borrowing now looking for us compared to, let's say, 1 year back?

So if you see on the long-term rate, this is near about 8.5%, right? So the PFC, the funding for Jharkhand, because Jharkhand is already merged with Adani Power and now Jharkhand is also being part of Adani stand-alone entity, this asset is also rated AA. So the interest cost has also got reduced significantly. Apart from that, our working capital rate is also near about 6.5% to 6.8%. And the non-fund based, the rates are also very, very competitive. So if you see on an overall basis, there is significant reduction in interest cost in comparison to the last year.

Okay. What would be the weighted average, sir, right now?

Weighted average cost will be near about -- it will be less than 9% this year.

And just on the merchant portfolio that's remaining, the remaining 10% of, let's say, 18.1, which is about 1.8 gigawatt. Could you quantify that across plants, like the merchant 1.8 gigawatt?

Just give me a moment.

We have readily available. So if you want to quantify it, for Kawai, we have 50 megawatt. For our Udupi, we have near about, very insignificant, 7 to 10 megawatt. In Mundra, we have 226 megawatt. Raigarh, we have near about 100 megawatts. In Raipur operating plant, this is near about 400 megawatt. In Mahan operating plant, we have near about 600 megawatts. And some small parts in some of the other plants. So making it total 10% of overall fleet.

[Operator Instructions]. The next question is from the line of Manish Somaiya from Cantor.

By the way, that's not fair that I only get 2 questions and everybody else gets 2, but that's okay. I'm kidding, by the way. But just a couple of questions. I guess I'll limit it to 2. First is, you talked about renewable capacity scaling, which impacted merchant pricing. So how should we think about that as renewable capacity increases over the next few years, how should we think about the structural impact on thermal dispatch and merchant pricing?

Okay. So let me brief you. We have 18.15 gigawatt of operating capacity. And we have the plan for capacity expansion of another 23.8, so near about 24 gigawatts, making it total 42 gigawatts over the period of next 6, 7 years, so in our financial year '31-'32. From our -- being the baseload power, this is 2-part tariff. One, fixed capacity charges on the basis of available of the plant and then energy charges. Out of operating capacity of 18 gigawatts. So this is, again, fixed capacity charges and energy charges. Fixed capacity charges, this is available of the plant where we are ensuring that our plant is available, so we are about 90% plus. In terms of PLF, it is driven by the market, right, when this depend upon on the demand and supply. If demand is high, then the PLF will be high and subject to the merit order dispatch. So our revenues and EBITDA, mainly EBITDA, is coming out from the -- mainly from the capacity charges basis available of the plant. Now coming to the addition of the plant, 24 gigawatt, our 100% EBITDA is driven by capacity charges only because fuelers are 100% pass-through. There will be no impact in terms of whether there is demand or not. If plant is available, we will raise our bill, and our EBITDA will be ensured. So to sum it up your -- answer to your question, operating assets, 18.15, then majority of the EBITDA is driven by capacity. Yes, there is some energy efficiency contributing to the energy charges, but 24 gigawatt, 100% EBITDA is driven by the capacity charges. That is why from our operating assets, we have 90% in the PPA and 10% open. We have mitigated the market volatility risk.

And I believe -- I think in the past...

Yes, go ahead.

Sorry. No, I was just going to say that I think in the past, you have said that the goal is to get the PPAs even higher, right? So maybe closer to 100%. Obviously, it may not be possible to get to exactly 100%, but close to it. Is that still the plan?

Yes. So you have to see the baseload and thermal capacity differently because this is part of resource adequacy, irrespective of sources of the power. Now -- so every state has to demonstrate that they have proper resource and to demonstrate proper resource, they are tying up all these PPAs. Now the baseload, which is mainly from the thermal, irrespective of the sourcing of power, this resource availability is there. And to ensure resource availability, every single state and DISCOMs, they are paying the capacity charges. Now over and above this resource adequacy capacity charges, if any DISCOM will source from thermal, then the energy charges will be added, the fuel charges. If it is from green, then green charges will be added. So the resource adequacy part for baseload capacity is constant irrespective of sourcing of power. And that is where the baseload is ensuring that our EBITDA is driven by availability of the plant, not on the basis of demand.

Yes. Manish, just to sort of go back to that original question that you had related to the increasing penetration of renewables. So in the last quarter and also the year till date -- till December, what has actually happened is that because of the extended monsoons, we have seen a good amount of increasing hydropower generation and the cooler temperatures, et cetera, have also taken the peak of a little bit. So this is generally the time when thermal power comes in to supply more power, but this is where hydropower and to some extent, the other sources of renewable power have also been able to meet the demand. So if you look at the mix overall, the contribution of thermal energy in Q3 FY '26 fell to 73% from 76% earlier. And for the total renewable energy contribution, which was around 20% earlier, that is both normal renewables plus large hydro. It has actually increased to around 24%. But that is actually a transient sort of a phenomenon. Of course, as renewable energy capacity increases, we'll start to see more and more power being supplied into the grid. But when it comes to merchant power, it would still have to contend with the inability to generate power on demand. Again, for hydropower, et cetera, as the hydropower resources get used up actually on a seasonal basis, the contribution comes down. And we are starting to see that also in terms of the daily merchant price movements on a 15-minute to 15-minute basis, hour-to-hour basis. So over a longer period of time, of course, the edge will come up a little bit, but at the same time, we also believe that peak demand will start to increase as more of household consumption of power increases and as also the industrialization related drivers come into place. So we expect to see that sort of 380 to 400 gigawatt peak capacity big requirement by fiscal '32, which would mean that there will still be good demand in the merchant market. And for the coming year, at least, we are hoping to see better merchant prices as compared to the last year -- the current year.

That's helpful. And then just to -- for my second question, as obviously, we're sort of towards the end of January, maybe if you can just give us a sense for how some of the operating metrics might be looking like on O&M availability, PLF and should we be aware of any exceptional items in this March quarter?

Yes. We hope. If we see the demand for December and January. This is already increased on year-on-year basis. It will -- and also the demand is higher by 10%, 12% on a month-to-month basis. What we are expecting that in quarter 4, the demand will definitely be higher than the current quarter. And so O&M availability, 90% anyway is there. And we think that PLF will also be better than quarter 3.

So as we approach the hotter months Manish, typically, we see the PLF going up. In the current year, when it comes to availability, we have carried out regular scheduled maintenance, both annual overhauls and capital overhauls in large number of units. And we expect to catch up with overall -- we are actually very much compliant with the normative capacity that you provide under PPA. But for the full year, we should be ending with more than 90% overall plant availability anyway. Now that we -- you can say the overhauls have been completed, right? Also, you also have to consider that we actually have acquired some of these plants that have been -- not been operated very well, not been maintained very well in the past. So we have undertaken lots of, you can say, activities to improve their efficiency and uptime. It should start to show fruits going forward.